Boeing Lost First Place In "Accidents Caused by Urgency" Reasons For Successive Accidents

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: January 2, 2025 (Thursday)
■ Talk: Cha Young-joo, Director of the Institute of i-Asset Economics, Professor Lee Jung-hwan of Hanyang University School of Economics and Finance

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.
◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): There's a lot of news about the international economy since the end of last year. So, the story of the economy that moves the world, we prepared the world economy time to expand your economic outlook to the world as the first hour of the vivid economy in 2025. We've invited you to their professional studio. Director Cha Young-joo came to the head of the Ai Asset Economic Research Institute. Please come in.

◇ Cha Young-joo, Director of the Ai Asset Economic Research Institute (hereinafter referred to as Cha Young-joo): Yes, hello.

◆ Cho Tae-hyun: Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance is also here. Please come in.

□ Lee Jung-hwan, professor of economics and finance at Hanyang University (hereinafter referred to as Lee Jung-hwan): Yes, how are you?

◆ Cho Tae-hyun: It's the first time of the new year, the first time of 2025, so I asked you what economic issues you're paying attention to today. The two of you joined together and cited economic growth. Do you both agree? Are you saying that the direction of economic policy in 2025 will be delayed this week due to the impeachment at the end of the year?

□ Lee Jung-hwan: Yes, he said he would do it in 2025, so he said he would do it until then, not unconditionally, because economic stability can actually help solve political uncertainty, but he said he would do it, but I think he couldn't do it because of the impeachment and the impeachment of the prime minister. This time, it was supposed to be released last year, so you can understand that it's natural to release it this year.

◆ Cho Tae-hyun: The growth rate of 2% will be difficult, of course.

□ Lee Jung-hwan: I think they're probably in the late 1% range. There are many factors. First of all, the concern about the export of the U.S. was the biggest external factor. In a way, what we aimed for economic growth last year was exports, but now that uncertainties in exports are growing, we have talked about tariffs several times, but we are a little worried about how much our exports will be hurt because there are strong claims that we will impose 25% tariffs on Mexico and Canada when the Trump administration is established. In particular, there is a high possibility that IRA subsidies for investments in the United States will be canceled. Concerns about subsidies. I can tell you that the growth rate will decline due to various concerns. Internally, it is difficult to operate economic policies smoothly if political risks occur.

◆ Cho Tae-hyun: And the martial law crisis is also cutting down on the growth rate itself.

□ Lee Jung-hwan: So consumer sentiment is shrinking and the domestic market is not good due to the high interest rate trend and inflation, which is likely to have a more negative effect. So many people predict that it's almost reasonable to look below the 2% range.

◆ Cho Tae-hyun: But a little while ago, Deputy Prime Minister Choi Sang-mok was broadcast live on our YTN TV broadcast, and I think it was related to Muan Airport. I think you're too busy. Will this go well?

□ Lee Jung-hwan: But I think it's too much work now. The acting president, the acting prime minister, and the Minister of Public Administration and Security are now vacant, so I think other public officials from the Ministry of Economy and Finance are now in a situation where high-ranking government officials have to disperse and do it. So now, the Ministry of Economy and Finance can't run the ministry well and in a way, shouldn't the Ministry of Economy and Finance take on too much of the work that has to be done directly? Recently, the nation's economy is stable. Things like IRA events should be mainly held, and various efforts should be made to protect the credibility to protect the national credibility, but other than that, isn't it too much work? In fact, high-ranking government officials who have limitations in areas that people can do usually do a lot of work. But since it gives a lot of additional work to it, I think it's true that I'm worried that this will be a little overloaded.

◆ Cho Tae-hyun: I think we can expect some good signals only when political uncertainty is resolved quickly. The stock market opens an hour later from 10 o'clock today. At the end of our stock market last year, we gave up to the 2,400 mark. Since Director Cha is an expert here, the outlook for this year is not very hopeful this year, right?

◇ Cha Young-joo: But I think I need to think about it like this. Today, starting and ending at 10 o'clock is the same as ending at 3:30 p.m. It doesn't end at 4:30 p.m. But isn't the current political situation going to the worst in a way? But the stock market is actively responding to those things right now. If you look at the stock market's recent daily movements, they immediately react to something political. Then I think you can twist it a little bit like this. Wouldn't our political landscape change this year anyway after Korea's economic growth rate is in the late 1% range as you said? It's going to change in some way. Even if President Yoon Suk Yeol rises to the presidency again, the political landscape will change again, so 2400 has already been broken to reflect such things. If there is a way to overcome this here this year, so I'm going to have an economic growth rate like you, and the result is the economic growth rate. So, if there is a factor that can raise the economic growth rate in the late 1% range to the 2% range, wouldn't there be a process to bottom out the index now?

◆ Cho Tae-hyun: So what's that factor?

◇ Cha Young-joo: First of all, the biggest thing is that political things need to be stabilized quickly. The most important thing is uncertainty. Even if we exclude the issues of who should lead the next country, it should be done quickly no matter who becomes the deputy prime minister. So, the acting president and others are running toward that goal, right? Now that there is no central point, especially now, Trump's inauguration day is less than 20 days away. In that state, we have to respond and do something, but the person who is at the central point now can't act as the central point. So, after those things are completed, our people are a powerful and powerful Korea, right? I think there is a possibility, and from the stock market's point of view, there are a lot of changes in the systems this year. So, when short selling resumes, there is a possibility that foreigners will come in rather than press the stock market. Since we have to do a long-show fund, those are the parts, and then we will strictly punish unfair transactions. And then there are public offering fund ETFs that have been prepared for various system improvements last year, and there are things that are being implemented right now this year. Of course, the implementation period will be sequentially in March and June, and the transaction time will increase. If these things start in March this year, if only the positive factors are ignited here, I am much more likely to see the stock market bottom out. So, rather than going further down here, there is a possibility that the work of finding a trigger for hope will appear this year. I want to look at it positively.

◆ Cho Tae-hyun: I'll try to find hope. Everyone, you hate short selling so much because of the short selling, but in fact, there are some things that play a negative role. However, all systems in the world have much more advantages than disadvantages, so in this regard, I will take a time to tell you in detail when I have a chance. Now, let's go into full-fledged international news. Let's talk a little bit about Boeing. Whether it was a Jeju Air disaster or an Muan Airport disaster, a very heartbreaking accident occurred at the end of the year. The Boeing 737-800 model had a lot of accidents in Korea, right?

□ Lee Jung-hwan: The 737-800 had a lot of accidents, and in fact, the news was made several times because the 8 Max, the next model, had a defect in the design of the aircraft, so there were a lot of accidents about the 737. There are a lot of accidents with 800 degrees, and the next one, the Max, has a lot of accidents with 8 Max, so it's a problem for Boeing right now. If you say that the 800 model has become a lot of issues recently, you can think of it as a defect as issues such as landing gear problems continue to emerge not only in Korea but also overseas. You can understand that it's a model that's already been discontinued, and you can think of the Max as a model that's been discontinued as the next model and the next models keep coming out.

◆ Cho Tae-hyun: Even if production is stopped, isn't the sky going to keep flying?

□ You have to fly around. They say they have more than 100 units in Korea, but Korea operates more than 100 units, so there are many accidents, and as I said earlier, landing gear problems have been continuously pointed out recently.

◆ Cho Tae-hyun: There are a lot of accidents because there are a lot of parameters, so it might be a little difficult to see it like this, right?

□ Lee Jung-hwan: There are a lot of accidents because there are a lot of parameters, but in fact, airplane accidents shouldn't happen. In fact, in the case of 8Max, the real accident is meaningfully a lot of accidents, and this has almost gone to the issue of gas defects, and 800 has also recently been said to have 8 to 9 accidents in 2010, so accidents are frequent. So, there are some issues as Eastern Airlines also had an accident not only in Korea but also in Eastern Airlines in 2022, followed by a recent accident in South West Airlines in the United States. So, it's an issue for Boeing itself, and especially the next 800 model, it's not designed, so there's a lot of accidents, so you can think of it as a problem for Boeing.

◆ Cho Tae-hyun: In general, it's not just the 737-800 737 Max, but it's a situation where noise and performance problems are constantly being discussed around Boeing.

◇ Cha Young-joo: In a way, it started with the 737-800, so in the case of Boeing, as you said before, aircraft accidents shouldn't happen. If you look at the 737-800, the thing that caused Boeing to falter is that the 737-800 is almost 800 for long flights without a double-decker. If it's Boeing, it's like that, so I'm sure you've ridden a lot of us that you can see often. You used to ride a lot when you went to Japan, and you rode a lot when you went to Southeast Asia. However, if this is a problem, there were cases where Max went all the way to a halt, but the fact that he has not been able to solve this problem is one of the factors that makes Boeing shake right now.

◆ Cho Tae-hyun: The beginning of Boeing's crisis erupted in this part of the 737 but there are many reasons, such as the acquisition of McDonnell Douglas. What does this mean?

◇ Cha Young-joo: So in the case of McDonnell Douglas, it's a defense company, and what it's like right now is that when you watch a World War II movie, the bomber, the bomber, the B-19 bomber, the part that Douglas made, and then Boeing made it into B-19. But what came out before was the Douglas flight that came out when Europe was bombed, and what was made to alleviate it was that Boeing began to grow from then on. But with the acquisition from Douglas, wouldn't this change the company depending on the will of the management? Before that, Boeing, when you do safety and things like that, safety and cost are at odds with each other. Pursuing safety is bound to cost a lot. But even if you do those things, there are parts that can be passed on to consumers in the end. These were the parts where you could raise the price of your flight, but when Douglas merged, people came in, and they approached it financially. As we approach financially, it's a concept that we have to do this, which can neglect our safety a little. As a result, there was a lot of opposition from within as well. So if you look at YouTube or things like this, you have to improve it, but if you watch it twice in the past or if you reduce the number of maintenance personnel there, you have to immediately reflect these improvements in the 737-800 as they accumulate and accumulate. You can't make it perfect from the beginning. Now that we recall cars, it's not easy to improve those areas, but now this is not just the acquisition of Douglas, but we've started to see various competitive models such as Airbus. In the past, Boeing was the sole leader, but as competitors appeared, it was difficult to pass on costs to consumers by being safe as in the past, so I can tell you if this problem occurred.

◆ Cho Tae-hyun: When any company starts to focus on costs or finance, accidents happen.

◇ Cha Young-joo: Now, Samsung Electronics also has things like that. There is also a rumor that the Samsung Electronics crisis has begun because CEOs in the financial sector came instead of those in technical positions. So now, this is not the answer, but as you said, it's a factor of change.

◆ Cho Tae-hyun: I suddenly remember that a company once said it would save money on inspecting the hull, but there was a massive oil spill. Then I'll ask Professor Lee this time. There is a view that there is a connection between the recent strikes and the problems related to Boeing. What do you think of the professor?

□ Lee Jung-hwan: It's not that it's actually related to our country's thinking. Because the model itself is different, the model is different and production has already been completed in 2020, so the relationship with this strike is actually small. However, as the risk to Boeing itself continues to be a problem of stability for Boeing aircraft, it can be considered that there are continuous concerns about such things. Next, there are still talks about whether Airbus's philosophy and how it operates the plane are ahead of Boeing. So, it's usually said that the Max is now a representative problem of design errors because Boeing was forced to follow it. Boeing's philosophy and Airbus's philosophy are slightly different, but the engine's position are slightly different. They ignore those things, design them, and try to overcome them through electronic equipment, but they say that it's true that they're experiencing a bit of Boeing risk. In fact, if these things don't perform, those workers have no choice but to go on strike again. Bonuses will not come out again, and these will be reflected in the continuous risk situation because they are forced to strike. However, I think that the difficult business environment and intensified competition with Airbus will be a problem now, but you can understand that it has nothing to do with the situation at Jeju Air and Muan Airport.

◆ Cho Tae-hyun: Okay. I can't remember the case I told you earlier, and I looked it up, and it was a case on this side of BP PLC. Anyway, it's not important, so let's move on. Let's move on to a really important story. Trump's return is less than 20 days away, right?

◇ Cha Young-joo: Yes, he will be inaugurated on January 20th.

◆ Cho Tae-hyun: Trump Recently, there's a man who looks stronger than Trump. I don't really like to quote old words, but I don't think there's anything else to say about them other than this. I'm telling you about Elon Musk, who is a "walker," but he recently got into conflict with Trump's hardline supporters. What happened?

◇ Cha Young-joo: When you think of Trump, there are a few things that come to mind. First of all, the Great America, then the tariffs, then the immigration policy, etc. are impressive. But with the immigration book, it's a little tough. In a way, this immigration policy is like that. In a way, it's a very sufficient agenda, but you don't have a job. The reason why you don't have a job is because of immigrants. I went with a simple brain expression like this.

◆ Cho Tae-hyun: When I looked at it last night, there were some terrorist accidents somewhere. I heard that this person was from the U.S. military and that he also took out immigrants from there?

◇ Cha Young-joo: Anyway, in a way, if you go to the real nose, it's like a nose ring, but now the Indian IT expert has appointed Sriram Krishnan as the White House AI senior adviser. This person is of Indian descent. But what he's talking about is now the senior adviser on AI. I just said that I would get rid of the permanent cap for technical immigrants. So, from the hard-liners' point of view, no, it's not expanding immigration. That's not what we originally had, so Musk declared his public support for Krishnan. He is from South Africa and immigrated to Canada and came to the United States. So I didn't come directly to the U.S. from the South African airport, but I came from Canada. Anyway, isn't India's IT huge in Musk and Big Tech? Now that I'm doing that, I'm going to accept some immigrants on this side. In a way, it's a little different from illegal immigration. But in their case, they come in with a visa called H1B. There are about 200,000 applicants a year. Recently, the number has decreased to about 180,000, but about 80,000 of them are coming out. So, it's from 3 years to the beginning 3 years and then 6 years. Now most of the people who work for big tech companies in the United States, especially Indian people, come in with this visa. This is not just given to anyone, but it should be a master's degree or higher. And now the occupation is limited to IT professors. That's why I'm saying that I'm going to come in after receiving this, but I'm going to accept immigration anyway. Now, I have to distinguish it from illegal immigration and from low-income people, but from a hard-line supporter's point of view, if you give this to me, I'll have to give you one more. I can tell you that there's some opposition now.

◆ Cho Tae-hyun: So the inside of the transition team seems to be a little noisy, is it possible for Trump to expel American immigrants as he originally promised?

□ Lee Jung-hwan: The common sentiment in the United States is that illegal immigration is a bit right, and let's accept some of these legal immigration. Especially in the field of science and technology, it is difficult not to accept immigrants if you try to compete with China.

◆ Cho Tae-hyun: But apart from that, ordinary workers and illegal immigrants account for a large portion of these parts.

□ Lee Jung-hwan: In particular, the general service industry has a big part in the very low wage, but nevertheless, now that there are issues such as security issues, they are asking us to curb illegal activities, and now the extreme far-right side should not accept immigrants at all. Because the American sentiment of Korea is that the far-right can live in the United States is linked to its own independence, so let's do it. In general, there should be low-wage workers for economic reasons. They are cheaper for people from overseas than Americans, and for technical jobs, China says that even after graduating from a doctor's degree, the wage is only 3 million won. If such a person wants to compete, they have to accept 80,000 people from abroad to be able to settle down in the United States and develop science and technology, so in reality, they have no choice but to accept both. However, I think it is common sentiment for illegal immigrants to come and confuse society, cause problems in security, and oppose such things, but I think the far-right is saying that we should stop this and raise the wages of American wage workers and go this way.

◇ Cha Young-joo: In a way, this could be the aftermath of global low growth. But I know that Europe was originally a little tolerant of immigrants. I've been talking about Africa and things like that, but recently Europe said it wouldn't accept immigrants.

◆ Cho Tae-hyun: When the economy is bad, I think that's always coming out everywhere.

◇ Cha Young-joo: So now that I'm coming out as an agenda makes you feel like you don't have a job because of that immigrant. If the U.S. says that the economic growth rate is very good right now, it's good for me to work and you to work together. But if you don't do that now, there are things about immigrants around the world, and on the other hand, there are things that you want to go to the U.S., Europe, and work in anyway. Since the situation in the United States is better now, rather than being in another country, I wonder if the conflict has begun quite a bit because of those things.

◆ Cho Tae-hyun: So many conflicts are representatively expressed within the transition team, but I think Musk's influence is quite strong. Musk also intervened in the budget issue, and Musk tried to intervene in social media issues and even in other countries' sovereignty and politics, and it can be said that he is taking care of the substance behind Trump. In fact, how much money has Musk made this year?
◇ Cha Young-joo: If you look at the details of how much you've earned, you're going to earn more from now on to now. According to the score so far, Musk is now known to have invested about $300 million and $400 billion in Trump, but as the stock price is actually going up now, wouldn't it have made 600 times more profit from the current $170 billion and 240 trillion won? Because Tesla's stock price has gone up tremendously now, right? That's why I did a surplus business.

◆ Cho Tae-hyun: It's not like a profitable business.

◇ Cha Young-joo: That's right. It's going to be a part of how long your relationship lasts. Anyway, the two of them are a contract or a certain spirit, so one of the characteristics of the United States is that it goes back to its original position when the contract period ends, so I think I can tell you that the current score is a profitable business.

◆ Cho Tae-hyun: But as you said, there are aspects of contractual relationships, but when people who have similar relationships get together, there's always a fight. In that sense, do you think this bromance between Trump and Musk could continue?

□ In fact, I think it's a U.S. contract interest, and it depends on how good Musk is now, so good policies may be a really good policy, but how well he does policies that match the popularity of the Republican Party and the Ministry of Information and Efficiency (Information and Efficiency) things like that. It hasn't been announced yet whether the government will agree to produce policies that suit Trump's taste and actually suit Trump's taste because he tends to be a little populist, so it's probably about how well he can produce results and attract public opinion because it's performance-based in the end. It's the same, so just as Korea does with the indicators, Musk's relationship with Trump continues to push Musk now, and the things Musk pushes help his approval rating, so he's actually doing it. Now, although I am not a political expert, popularity is bound to follow in this combination of politics and economy, and how to generate popularity is actually an indicator of how much helps the Trump administration and how much it helps popularity. So it's still uncertain, but with some opinions coming out and policies coming out, maybe these things will become visible. If the popularity declines, they will break up quickly. You can think of it as a natural medicine.

◆ Cho Tae-hyun: Then let me ask you one last question. As an expert to the director, one of the favorite stocks of Western scholars is Tesla, and Tesla's stock price has risen a lot taking advantage of Elon Musk's honeymoon relationship with Trump. Is it worth buying this now?

◇ Cha Young-joo: Rather than being worth buying, I think we should think about it the other way around. So, the most important thing about Tesla's stock price going up is corporate profits, and corporate profits still come from electric vehicles, but there are a lot of different aspects of evaluating Tesla, such as aerospace and then autonomous driving. But recently, if you look at the characteristics of the U.S. stock market, Nvidia led early 2024 and Tesla led in the second half of the year. One of the reasons Tesla led is that political elements cannot be ruled out. I think I told you last time when so many people are interested in it, but in that case, isn't it better to slow down and look at the situation? If you ask another question and ask if you should buy Bitcoin now, it's a little bit. And I'll tell you that Tesla is not a bad company, but its stock price is a little high.

◆ Cho Tae-hyun: Okay. I've even talked about Tesla, an American political theme stock. So far, I have diagnosed the 2nd Trump Boeing problem and various global economic issues with Professor Lee Jung-hwan of Hanyang University's School of Economics and Finance and Cha Young-joo, director of the I Asset Economic Research Institute. Thank you for talking today.

□ Lee Jung-hwan, ◇ Cha Young-joo: Thank you.

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